The present invention relates to plans for repaying loans and other installment debts, such as mortgages, on accelerated schedules. More particularly, the present invention is directed to computer-implemented systems and methods that organize, forward, and report the application of many individual consumer payments to their corresponding lenders and creditors with the objective of saving the consumer money over a standard installment repayment history.
In general, a consumer borrows money from a lender, typically to make a purchase of a home, automobile, or other large item of real or personal property. The borrowed monies are paid back to the lender, or a designated third party, over a period of time or term. Additionally, the lender charges interest on the unpaid loan principal at an agreed interest rate. Each installment payment, usually made once a month, is typically applied first against the interest earned, and then goes towards reducing the outstanding unpaid principal. For each payment, particularly early in the repayment schedule, the amount that goes towards reducing the principal can be relatively small (e.g., 10% or less).
If the borrower can make payments more frequently than once a month, or pay more than the prescribed monthly payment, the loan principal will be reduced faster. As a result, the amount of interest paid by the consumer also is reduced. For example, if the borrower pays one-half the monthly payment amount every two weeks, the borrower will have made twenty-six (26) payments in one year, or the equivalent of thirteen (13) monthly payments. This payment scheme may reduce the term of a 30-year mortgage by several years, with thousands of dollars potentially being saved over the standard monthly payment schedule.
Commerce has always depended on the flow of value, i.e., companies and individuals paying what they owe and collecting what they've earned. The conduit for the flow of value is the payments system which has progressed from barter, to coins, to paper currencies, to checks, and lately to electronic payments. In decades past, cash and checks were the preferred payment calculators for consumers and businesses. Today, businesses, government agencies, and consumers feel the burden of paper overload as more than sixty-three billion checks are processed every year. Each check must be written or printed, signed and mailed, and then retrieved, reconciled, and stored. With increasing incidents of check fraud and a strong emphasis on privacy, traditional check-issuers are demanding more secure and confidential alternatives provided by electronic payments.
Direct deposit is the automatic deposit of all or part of employees' pay, retirees' pension and annuities, and other business deposits to consumers' checking, savings, and/or brokerage accounts. Instead of printing checks, the employer or benefactor (originator) supplies a computer file containing a record for each participating employee/retiree/consumer to the businesses financial institution (the ODFI). The ODFI assures correct formatting and transmits the file to the automatic clearing house (ACH) operator for delivery to the employees'/retirees'/consumers' (receivers') depository accounts at their financial institutions (RDFI's).
In the case of direct deposit of payroll, the employer regularly provides the employee with information regarding gross pay, payroll deductions, tax withholding, net pay, and other appropriate details. Similarly, businesses supply other appropriate data to pensioners, annuitants, and consumers regarding the credits to their depository accounts. Direct payment and home banking/bill payment services save consumers time and money by eliminating checks, check handling, and postage. With direct payment, consumers can preauthorize electronic debits to their depository accounts for types of recurring bill payments such as insurance premiums, utility bills, all types of loan payments, mortgages, club memberships, subscriptions, and charitable contributions. To initiate direct payment, consumers must provide a written authorization to their participating billing companies, clubs, charities, etc. Authorizations may be cancelled at the discretion of the consumer according to the procedures outlined in the authorization. Cancellation of direct payment has no effect on the consumers' financial obligation to the billing company. With appropriate authorization, the billing company originates a computer file containing payment information. The company's financial institution transmits the debit through the ACH-network to the consumer's depository account.
When consumers choose to participate in conventional home banking/bill payment services, they can initiate their bill payments by telephone, computer, or other calculators. The consumer's service provider initiates ACH debits from the consumer's bank account and ACH credits to the consumer's billing account for the authorized payment. Home banking/bill payment services are offered by various financial institutions and other private service providers throughout the United States. Direct payment and home banking services provide benefits to both companies and consumers. Companies reduce expenses associated with check processing and improve cash flows by reducing delinquencies and late billing procedures. Consumers reduce check and postage costs and save the time of manually preparing and mailing checks. In addition, consumers can reduce late fees, forget about payment deadlines, and make their account reconciliation process simpler. Consumers never relinquish control of their accounts. Direct payments and home banking/bill payment services may be terminated or modified at any time according to procedures outlined in the authorization agreement.
Electronic commerce can incorporate all aspects of the ordering, inventory, and payments processes of businesses. Companies may use electronic data interchange (EDI) to place orders; to update, control, and reorder inventories; to transmit billing statements; and to collect or make payments. The ACH-network is an efficient electronic payment alternative to checks and wire transfers to complement electronic commerce. Electronic business payments may be ACH debits or ACH credits depending on the needs of and the agreements among trading partners. The ACH-network provides an electronic payments calculators for financial EDI, Internet payments, corporate trading partner exchanges, corporate cash management, and other business-to-business transactions such as transmission of insurance and healthcare information and payments.
Financial EDI is the electronic movement of payments and payment-related information in standard formats through the banking system. Businesses of all sizes; state, local, and federal government agencies; and financial institutions are incorporating financial EDI into their payments practices to minimize the flow of paper, to reduce administrative costs, and to improve efficiencies. Businesses use the ACH-network to pay or to collect from corporate trading partners. The transaction sets of the ACH-network provide varying levels of payment transfers from the simplest to the most complex, including invoice numbers, discount, adjustment, and other remittance information.
Since the 1990s, the Internet has become an increasingly important tool for business-to-business communications. Companies use the Internet to place orders, update inventories, and authorize payments. The ACH-network provides an efficient payments calculator to settle transactions initiated on the Internet. Good corporate cash management techniques allow businesses to accelerate cash in-flows, manage account balances to reduce borrowing needs, improve earnings potential of operating capital, and precisely control cash disbursements. The ACH-network allows companies to move money between branches or offices quickly and reliably based on operating needs. Companies with geographically dispersed offices can use the ACH-network to draw funds into centralized accounts from widely-scattered financial institutions. Similarly, funds can be disbursed to remote operations as needed. The ACH-network is an efficient calculator to shift balances to and from centralized concentration accounts to effectively administer corporate operations.
Notwithstanding the above benefits, improvements from both a consumer perspective and a service provider perspective are desired. For example, prior attempts to move money for customers have been limited to single transactions, or single subscriptions having a single balance and/or served from a single custody account. It would be desirable to provide more flexibility for consumers to service multiple transactions or subscriptions, and to provide a logical grouping of disbursements, as well as to provide other benefits.